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Toyota (TM) to Build 1st US Battery Plant in North Carolina

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Toyota Motor TM recently announced its decision to build the first battery factory in the United States in North Carolina to bring its electric vehicle (EV) supply chain to the country.

The Japan-based automaker plans to invest $1.29 billion in the battery plant, to be named Toyota Battery Manufacturing, North Carolina (TBMNC). The facility is expected to create 1,750 new jobs and use 100% renewable energy to make the batteries. The production is anticipated to commence in 2025.

TBMNC will initially have four production lines, each capable of manufacturing battery packs for around 200,000 cars annually. Toyota eventually aims to add two more lines, with the goal to rev up the total production capacity to battery packs sufficient for 1.2 million vehicles per year.

The auto biggie chose North Carolina for the plant location. It offers the appropriate conditions for this investment, including a developed infrastructure, a high-quality education system, and access to a skilled workforce. Further, North Carolina’s Economic Investment Committee has approved a $438.7-million tax incentive package to encourage Toyota to build a factory in the state.

With the aggravating climate-change concerns, automakers across the globe have been revving up their EV efforts in order to roll out more environmental-friendly vehicles on the road. The development of batteries used to power EVs has become crucial in order to decarbonize the global economy. Global automakers have enhanced their investments in battery production as they compete with the EV behemoth Tesla TSLA.

Amid this changing scenario, Toyota has also been a pioneer in the mass production of solid-state batteries, revolutionizing the EV space.

The latest investment decision forms part of Toyota’s wider commitment to investing $3.4 billion (380 billion yen) for automotive battery development and production in the United States through 2030. Moreover, the latest project is expected to help Toyota advance its climate goals to achieve carbon neutrality sustainably.  Also, the investment is expected to usher in an era of more affordable EVs for U.S. consumers.

Toyota’s Electrification Strides

Toyota has been the king of hybrid vehicles since the introduction of its popular Prius compact vehicle. It has also been investing in fuel-cell vehicles like the Mirai and sells the UX300e in Europe and China. However, the auto giant has been relatively slower in the adoption of EVs into its line-up and has no pure-electric offerings at the moment. Nonetheless, the automaker is set to roll out its first all-electric line-up next year in an attempt to quell criticism that it has been slow to shift to electric cars. It also plans to build about 70 hybrid or electric models by 2025, of which 15 will be fully electric. It targets to sell 8 million partially or fully electrified vehicles by 2030. About 2 million will be battery-powered cars and fuel-cell vehicles, while the other 6 million will be gasoline-electric hybrids or plug-in hybrids.

Further, to cater to the surging demand for clean energy vehicles in the United States, this Zacks Rank #3 (Hold) company envisions EVs to account for nearly 70% of its U.S. sales by 2030, up from almost 25% currently. The company expects to sell as many as 1.8 million electrified vehicles in the United States by 2030, including the zero-emission models.

This September, TM earmarked more than $13.5 billion for investment in battery development and production through 2030. It also intends to slash the cost of its batteries by 30-50%. It anticipates achieving this goal by working on the raw materials used to produce batteries and the way the battery cells are structured. It also plans to optimize the power consumption of these batteries by 30%, starting with its upcoming compact SUV model — Toyota bZ4X — unveiled recently, where “bZ” stands for “beyond zero,” highlighting Toyota’s goal to become carbon neutral by 2050. It aims to set up a total of 70 EV battery lines by 2030, capable of producing 200-gigawatt hours of battery power.

Auto Companies to Focus On

A few better-ranked stocks in the auto space include Tesla, Harley-Davidson HOG and Goodyear Tire GT, all of which flaunt a Zacks Rank of 1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

Tesla has an expected earnings growth rate of 166.96% for the current year. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 6 cents over the last 30 days.
 
Tesla beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. TSLA has a trailing four-quarter earnings surprise of 25.38%, on average. Its shares have rallied 57.3% over the past year.

Harley-Davidson has an expected earnings growth rate of 34.92% for the current quarter. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 2 cents over the last 30 days.  

Harley-Davidson beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. HOG has a trailing four-quarter negative earnings surprise of 138.45%, on average. Its shares have dropped around 4.2% over the past year.

Goodyear has an expected earnings growth rate of 196.86% for the current year. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 42 cents over the last 30 days.

Goodyear beat the Zacks Consensus Estimate for earnings in the last four quarters. GT has a trailing four-quarter earnings surprise of 228.45%, on average. Its shares have rallied 100.5% over the past year.


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